Seagen Inc

F:SGT

Earnings Call Transcript 2020-Q4

[Operator]

Good day, and welcome to the Seagen Fourth Quarter and Full Year 2020 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Ms. Peggy Pinkston, Vice President of Investor Relations. Please go ahead.

[Peggy Pinkston, Vice President of Investor Relations]

Thank you, operator, and good afternoon, everyone. I'd like to welcome all of you to Seagen's fourth quarter and full year 2020 financial results conference call. This afternoon we issued a press release with our results and that press release and supporting slides are available on our website in the Investors section, Events and Presentations page. Speakers on our call today will be Clay Siegall, President and Chief Executive Officer; Chip Romp, Executive Vice President, Commercial, U.S.; Todd Simpson, Chief Financial Officer; and Roger Dansey, Chief Medical Officer.

Following our prepared remarks, we'll open the line for questions. We aim to keep this call to one hour and so ask that you limit yourself to one question to give everyone an opportunity to participate in Q&A during our call today. Today's conference call will include forward-looking statements regarding future or anticipated events and results including the company's 2021 financial outlook, anticipated product sales, revenues, costs and expenses and potential clinical and regulatory milestones including data readouts, regulatory submissions and approvals. Actual results or developments may differ materially from those projected or implied in these forward-looking statements.

Factors that may cause such a difference include the difficulty in forecasting sales, revenues and expenses, impacts related to the COVID-19 pandemic and the uncertainty associated with the pharmaceutical development and regulatory approval process. More information about the risks and uncertainties faced by Seagen is contained under the caption Risk Factors included in the company's current report on Form 8-K filed with the Securities and Exchange Commission on December 29, 2020 and the company's subsequent reports filed with the SEC.

And now, I'll turn the call over to Clay.

[Clay Siegall, President and Chief Executive Officer]

Thank you, Peg, and good afternoon, everyone. The past year was pivotal in the evolution of our business. We expanded our geographic footprint and operations beyond the United States and Canada with presence across greater Europe as we prepare for additional launches of TUKYSA. We are now a multi-product global oncology company with substantial financial strength to fuel ongoing company investments. We have laid a strong foundation for continued growth and the ability to bring important medicines to cancer patients in need.

I'll start with a summary of our recent financial performance. We reported record 2020 product sales in our territories of just over $1 billion reflecting a 59% annual increase. These results were driven by successful PADCEV and TUKYSA launches as well as continued strong ADCETRIS sales. Total revenues were $2.2 billion in 2020, which included royalties and collaborations, notably our new strategic partnership with Merck. We ended 2020 with $2.7 billion in cash and investments, which strongly positions us to continue advancing our programs.

In 2021, we expect to see continued growth at PADCEV and TUKYSA and maintain market share for ADCETRIS with anticipated product sales in our territories of approximately $1.3 billion. Todd will walk us through our 2021 guidance and Chip will discuss the commercial dynamics, but first I'd like to reflect upon the past year. During 2020, we delivered multiple important business regulatory and development milestones. I'd like to provide you with a few highlights beginning with ADCETRIS. Our partner Takeda gained more ex-US approvals, including in China.

Additionally, in December, we presented data from the ECHELON-1 and ECHELON-2 Phase 3 trials at ASH demonstrating robust and durable remissions at five years. This is a clinically meaningful and important milestone in a cancer patient's journey. We are committed to maximizing ADCETRIS patient reach through our clinical development program in Hodgkin lymphoma and other CD30-expressing malignancies.

Next I'll turn to PADCEV, a first in class ADC that we're developing and commercializing in collaboration with Astellas. PADCEV has shown rapid adoption since its FDA accelerated approval for metastatic urothelial cancer just over a year ago. In 2020, we announced positive top-line results from two PADCEV studies. This included strong data from our single arm Phase 2 trial in cis-ineligible metastatic urothelial cancer patients previously treated with an immune checkpoint inhibitor. We expect to submit these data to FDA and a supplemental BLA within the next few weeks.

Last year, we also reported top-line results from a randomized Phase 3 trial in patients with previously treated metastatic urothelial cancer. Results demonstrated that PADCEV significantly improved overall survival and progression-free survival versus standard of care chemotherapy. These data will also be submitted to FDA resulting in two concurrent supplemental BLAs in the next few weeks. In addition, global submissions for these trials are planned to support marketing applications in the EU and Japan later this quarter. Also last year, we received breakthrough therapy designation for PADCEV in combination with KEYTRUDA in first-line metastatic urothelial cancer.

We are currently enrolling two trials designed to support approval in first-line metastatic patients, one to support accelerated approval in cis-ineligible patients and the other to support global approvals in patients regardless of platinum eligibility. Our goal is to redefine first-line treatment for metastatic urothelial cancer patients around the globe. Finally, in 2020, we made significant headway and exploring earlier stages of bladder cancer. In collaboration with Astellas and Merck, PADCEV has been tested in two randomized Phase 3 trials in cis-ineligible and cis-eligible muscle invasive bladder cancer patients.

Now on to TUKYSA, a best in class HER2 TKI for HER2 positive metastatic breast cancer patients with and without brain metastasis. In 2020, TUKYSA was also approved in the United States as well as Australia, Canada, Singapore, and Switzerland under the FDA's project Orbis. In December, we received a positive CHMP opinion recommending European commission approval of TUKYSA in the EU and we are preparing for its potential launch further extending TUKYSA's reach.

Lastly, in order to accelerate the commercialization of TUKYSA in regions beyond the U.S., Canada and Europe, we entered into a strategic collaboration with Merck in 2020. Our three currently approved products are important first in class or best in class medicines that have been embraced by oncologists. We are making substantial investments in their continued development, which will provide growth catalysts in future years. We believe that each of the brands have blockbuster potential.

ADCETRIS is a mainstay in the treatment of CD30 lymphomas and has achieved strong market penetration and its six indications. Global sales of ADCETRIS in 2020 were approximately $1.2 billion and nearly 83,000 patients around the world have received ADCETRIS therapy. We expect that the impact of COVID-19, which is leading to fewer frontline Hodgkin lymphoma diagnoses, will resolve in time, but this is hard to predict. We believe that future growth of ADCETRIS will be primarily based on label expansion supported by our multiple ongoing trials that we expect to read out in the next few years.

PADCEV has become the standard of care in its current labeled indication. We expect that both supplemental BLA submissions if approved will further strengthen PADCEV's role in the treatment of patients with advanced metastatic urothelial cancer. Looking towards first-line metastatic bladder cancer, we expect to complete enrollment in the cohort K accelerated approval trial by the end of this year factoring in a follow-up period to observe duration of response, data from this cohort could support a supplemental BLA in 2022.

In addition, three large Phase 3 trials are currently enrolling in first-line metastatic urothelial cancer and muscle invasive bladder cancer. These trials are intended to serve as the basis for multiple global submissions in the future. TUKYSA is an important medicine that has been rapidly adopted by oncologists. We're planning launches in Europe during 2021 as well as seeking reimbursement approvals on a country by country basis. Additionally, we're conducting several large potentially pivotal trials in breast, gastric and colorectal cancers. We expect to complete enrollment in the MOUNTAINEER trial in colorectal cancer patients by the end of 2021, while our other studies will continue to enroll.

Building on the success of ADCETRIS with our six labeled indications, we expect PADCEV and TUKYSA to reach even more patients in the future. This is based on our ongoing extensive clinical development programs that Roger will describe in detail. I'll now turn to our late-stage clinical development programs tisotumab vedotin also known as TV and ladiratuzumab vedotin known as LV. Yesterday, we and Genmab announced the submission of a BLA for TV in patients with recurrent or metastatic cervical cancer, positioning it to be our fourth commercial product.

This is a significant milestone for Seagen and would further expand our commercial portfolio. We also recently initiated the innovative 301 Phase 3 study in metastatic cervical cancer, which is intended to support global regulatory applications and serve as the confirmatory trial. Aligned with our goal of addressing the high unmet need for patients with hormone receptor-positive and triple negative breast cancer, last year we announced a global collaboration with Merck to co-develop and co-commercialize LV. The collaboration is intended to accelerate the development of LV and focuses on evaluating this highly active ADC as monotherapy and in combination with KEYTRUDA in LIV-1-expressing solid tumors.

As we look ahead to 2021 and beyond, we are focused on three strategic priorities to drive continued innovation and growth. The first is to maximize the global potential of our three approved medicines through robust clinical development programs and exceptional commercial execution. The second priority is to advance late-stage programs towards securing approvals for new products including TV and LV. And the third is to expand our already strong and innovative early stage pipeline through continued leadership and innovation in the ADC space, internal R&D investments and corporate development opportunities. Focusing on these strategic pillars will ensure our organization is aligned to deliver substantial value to our key stakeholders, notably stockholders, our employees and especially cancer patients.

Next, I'll turn the call over to Chip to discuss our commercial activities. Then Todd will comment on our financial results and 2021 guidance. After that, Roger will discuss our clinical development activities and key milestones for the year ahead. Chip?

[Chip Romp, Executive Vice President, Commercial, U.S.]

Thank you, Clay. The commercial team closed out a very successful year with a solid fourth quarter. Launching two drugs in these unprecedented times was a difficult task through strong digital marketing strategies, creativity and outstanding customer relationships our team delivered. Successful launches of PADCEV and TUKYSA drove 59% total net product sales growth in 2020 over 2019. I would like to thank all my commercial colleagues for their dedication and efforts in 2020 to ensure appropriate patients received our products.

Starting with ADCETRIS, we reported fourth quarter sales of $164 million and $659 million for the year, a 5% increase over the full year in 2019. We continue to see an impact on ADCETRIS sales due to the pandemic based on claims and electronic medical records data, new Hodgkin lymphoma diagnosis trends continue to be approximately 15% lower than historic levels. We are now promoting the five-year follow-up data from the ECHELON-1 trial in frontline HL, and early reactions to these important data have been favorable. Five-year outcomes are an established standard and we expect that the durable advantage of ADCETRIS will drive incremental share.

Moving onto PADCEV, fourth quarter sales were $69 million, an increase of 11% over the third quarter of 2020. Full year PADCEV sales were $222 million. We received rapid adoption in our labeled indication and look forward to promoting upon approval the overall survival data observed in the EV-301 trial and the strong Cohort 2 Data in metastatic urothelial cancers. Both indications would meet a significant unmet need for patients who have received a prior PD-1 or PD-L1 inhibitor. Our guidance takes into consideration our high market share in our current labeled indication and evolving market dynamics, such as increasing use of PD-1 or PD-L1 inhibitors in the frontline. We are confident that PADCEV is well positioned this year for continued growth.

Transitioning to TUKYSA; fourth quarter sales were $61 million, a 45% increase over the third quarter. Full year sales at TUKYSA were $120 million. We continue to see adoption of TUKYSA across its strong label and payer coverage continues to be solid. We were pleased with the growth we are seeing in both the community and academic settings.

I will now turn the call over to Todd.

[Todd Simpson, Chief Financial Officer]

Great. Thanks Chip and thanks to everyone for joining us on the call this afternoon.

Today, I'll summarize our financial results for the fourth quarter and full year in 2020. I'll then provide our financial outlook for 2021. Total revenues were $601 million in the fourth quarter and $2.2 billion for the full-year in 2020. This included net product sales of $294 million for the fourth quarter and $1 billion for the four year. This is the first time we have recorded net product sale of $1 billion, and this reflects the substantial growth in now a diverse commercial portfolio, which includes three important drugs.

Royalty revenues were $39 million in the fourth quarter and $127 million for the full year in 2020. Royalty revenues are primarily driven by increasing sales of Adcetris by Takeda, and to a lesser extent sales of Polivy by Roche and BLENREP by GSK both of which are ADCs that utilize Seagen technology. Collaboration of license agreement revenues were $268 million for the fourth quarter and $1 billion for the full year in 2020. Notably the full year of 2020 included $975 million related to the LV and TUKYSA deals with Merck of which $250 million was recorded in the fourth quarter.

These collaborations are significant for the company both financially and strategically, and will accelerate the development of LV. Cost of sales in the fourth quarter 2020 was $62 million and $218 million for the full year. This included product costs of sales and royalties for each of our three brands and the PADCEV profit share to Astellas, which was $32 million in the fourth quarter and $105 million for the four year in 2020.

In addition, cost of sales included two TUKYSA related items; non-cash amortization of acquired technology costs of approximately $6 million per quarter. That began in the second quarter of 2020, and a sub-license fees that was paid related to the TUKYSA license agreement with Merck. R&D expenses were $216 million in the fourth quarter and $827 million for the full year in 2020. Growth over 2019 primarily reflected increased investment across our pipeline aimed at extending the use of our commercial products through expanded labels, as well as investment in the development of our earlier stage programs.

SG&A expenses were $158 million in the fourth quarter and $534 million for the full year in 2020. These are planned increases over 2019 and reflect U.S. commercialization of PADCEV and TUKYSA and our European expansion as we prepare for the TUKYSA launches later this year. Regarding the profit recorded through the fourth quarter and for the full year in 2020, this is the result of revenue recognized under our two new collaborations with Merck. Our long-term growth strategy continues to remain on investment to maximize the potential of our approved products in advancing our pipeline. We ended the year with $2.7 billion in cash and investments, which includes proceeds from the $1 billion equity investment from Merck in the fourth quarter. This positions us strongly to advance our plans in 2021 and beyond.

Now regarding our 2021 financial outlook, I'll begin with revenue guidance. First, we expect total revenues to be in the range of approximately $1.4 billion to $1.5 billion. This breaks down as follows: we expect total product sales to be approximately $1.28 billion to $1.34 billion, which includes ADCETRIS sales in the range of $675 million to $700 million. PADCEV sales in the range of $310 million to $325 million, and TUKYSA sales in the range of $300 million to $315 million. Clay and Chip provided some context around what we envisioned to be the growth drivers for each of the brands in the near and longer term.

Next with respect to royalty revenues, we expect them to be in the range of $125 million to $135 million, primarily reflecting sales of ADCETRIS by in its territory and to a lesser degree contributions from POLIVY and BLENREP.

Finally, collaboration revenues are now primarily event driven and dependent upon progress by our ADC collaborators. We expect these revenues to be less than $20 million in 2021. Beginning next year, we expect collaboration revenues will reflect contributions from PADCEV sales by Astellas in its territories.

I'll now turn to expensive. Costs of sales is expected to be in a range of $270 million to $300 million. This will be driven by increased product sales across all brands and a higher profit share payment to Astellas as a result of higher expected PADCEV sales. Cost of sales will also reflect third-party royalties owed as well as non-cash amortization.

R&D expenses are expected to be in the range of $900 million to $1 billion, primarily related to two items. First investment in clinical trials to expand ADCETRIS, PADCEV and TUKYSA into additional indications and second increased investment to advance our earlier stage pipeline that includes nine other programs in clinical development. We believe that these investments are important to our long-term growth. SG&A expenses are expected to be in a range of $650 million to $725 million as we continue to focus on commercial execution to drive growth of our three approved products.

This guidance also includes the global infrastructure to support the launches to TUKYSA in Europe. Taken together, our 2021 guidance reflects both that we continue to see significant opportunity for our approved medicines and that we will continue efforts to develop new medicines for unmet medical needs.

And with that, I'll turn the call over to Roger.

[Roger Dansey, Chief Medical Officer]

Thank you, Todd, and good afternoon everyone.

Today, I will provide an update on recent progress for our approved medicines and pipeline programs, and we'll outline key milestones anticipated in the year ahead. Beginning with ADCETRIS we presented the important five-year follow-up data at ASH for the Phase 3 ECHELON-1 trial. ADCETRIS in combination with ABVD resulted in superior long-term outcomes when compared to ABVD in frontline advanced Hodgkin lymphoma. The clinically meaningful improvement in PFS has continued since the primary analysis reflecting the durable benefit seen with the ADCETRIS regimen.

Notably, we also saw fewer second malignancies and more pregnancies in those who received ADCETRIS plus AVD versus those who are treated with ABVD. We are pleased with these aspects of the data in a population of generally young patients with families. Going forward we continue to see multiple opportunities for ADCETRIS and are advancing trials in Hodgkin lymphoma, PTCO and DLBCL. Most recently we have begun enrolling a trial, evaluating ADCETRIS as an immunomodulatory agents in combination with TUKYSA in solid tumors.

Turning now to passive, full results from the EV-301 trial and Cohort 2 of the EV-201 trial, both conducted in patients with previously treated metastatic urothelial cancers will be presented tomorrow in oral presentations at ASCO GU. The Phase 3 EV-301 data demonstrated a clinically meaningful and statistically significant 30% reduction in the risk of death among patients who received PADCEV compared to those who received chemotherapy. In this new era of frequent checkpoint inhibitor use for metastatic urothelial cancer, PADCEV is the first drug shown to reduce the risk of death after patients who received a platinum chemotherapy and a checkpoint inhibitor. PADCEV has also shown a clinically meaningful response rate in patients who were ineligible for cisplatin in the metastatic setting and were treated with a checkpoint inhibitor.

EV-301 and EV-201 data will be submitted to regulatory authorities this quarter to support U.S. and global approvals. Another key component of our passive development program is our two pronged approach to support approval in the first line metastatic urothelial cancer setting. We plan to complete enrollment of cisplatin ineligible patients receiving PADCEV plus KEYTRUDA in cohort K of the EV-1-3 trial by the end of this year. And if the data are supportive as supplemental BLA could occur in 2022 after appropriate follow-up for duration of response.

We continue to enroll patients into the Phase 3 EV-302 global trial, which includes cisplatin eligible patients evaluating PADCEV plus KEYTRUDA compared to a platinum containing chemotherapy regimen. As we move PADCEV into earliest stages of bladder cancer, we and our partners tell us together with Merck recently initiated the KEYNOTE-B15 or EV-304 trial to evaluate PADCEV in combination with KEYTRUDA in cisplatin-eligible Muscle Invasive Bladder Cancer. This trial is in addition to the ongoing trial in cisplatin ineligible muscle invasive bladder cancer patients known as KEYNOTE-905 or EV-303.

Additionally, we are also in advanced planning for trial to examine PADCEV administered directly in the bladder in non-muscle invasive bladder cancer patients. Lastly, since the launch of PADCEV, we have continued to monitor the safety of our products in clinical trials and in the post-marketing setting. As a reminder Nectin-4 is expressed in the skin and rashes common, but as generally mild and reversible. So the rashes however do occur and are described in the current U.S. prescribing information.

So the percutaneous adverse reactions including fatal cases of Stevens-Johnson syndrome and toxic epidermal necrolysis have occurred in patients treated with PADCEV in the post-marketing setting and during trials. With patient safety being our highest priority, we are communicating the occurrence of these rare events by a litter, together with updated recommendations to healthcare providers who may treat patients with urothelial cancer. We are also working with the FDA regarding updates to the U.S. prescribing information to reflect these events.

The overall benefit risk balance remains favorable for the use of PADCEV and approved indications. PADCEV provides significant benefits in a high unmet need population with metastatic urothelial cancer, which is further, supported by our most recent data, so an improvement in overall survival in the indicated population.

Moving on at the San Antonio Breast Cancer Symposium in December, TUKYSA was featured in several abstracts. A key presentation provided new analysis from the pivotal HER2CLIMB trial demonstrating consistent improvements in progression-free survival, overall survival and objective response rate regardless of where the patients were hormone receptor-positive or hormone receptor-negative.

With regard to our clinical development program, we are excited to be expanding our evaluation to TUKYSA into earlier lines of breast cancer treatments and into GI cancers. So this end, we are currently advancing eight TUKYSA clinical trials of which five have registration intent.

Now I would like to turn to one of our left stage programs, tisotumab vedotin. For women with metastatic cervical cancer, who progress on first-line treatment, standard therapies typically have low objective response rates of less than 15% and median overall survival ranging from six to nine months. The innovative 204 trial demonstrated clinically meaningful durable responses within our 24% and median duration of response of 8.3 months. And are the pivotal data included in the recently announced BLA submission. We are motivated at the prospect of a fourth approved medicine that could make a meaningful difference to metastatic cervical cancer patients with such a high unmet need.

Moving on to the ladiratuzumab vedotin, we are working with Merck to accelerate the development of LV, both as a monotherapy and in combination with KEYTRUDA. Our development program includes trials in triple negative and hormone receptor-positive breast cancer, as well as a basket trial in eight other LIV-1 expressing solid tumors. We are making progress on optimizing the dosing schedule of LV and have extended the weekly schedule evaluation to the combination of LV with KEYTRUDA.

Turning now to our earliest stage pipeline we have in the clinic three novel ADC's two of which you use Vedotin payload and four effector function enhanced antibodies using SEA technology. Our most recent to drug to enter Phase 1 is our novel ADC SGN-STNV. This targets Sialyl Thomsen-nouveau, a carbohydrate antigen, which is highly expressed across multiple solid tumors.

I would now like to summarize some of the important upcoming milestones that we are looking forward to in 2021. Beginning with regulatory, we have just submitted the TV BLA and look forward to working with the FDA on the application. Additionally, we look forward to hearing from regulatory authorities in Europe on our TUKYSA marketing authorization application, and passive will be submitted to regulators in the U.S., Europe and Japan by the end of this quarter.

Moving to clinical trial activities, we expect to complete enrollment in the pivotal cohort K of the PADCEV EV-103 trial and the pivotal TUKYSA MOUNTAINEER trial by the end of 2021. We have opened the innovative 301 global confirmatory trial, and we have the potential to initiate several other pivotal trials across our pipeline in 2021.

Finally, we plan to have multiple data readouts this year. This includes data from LV and multiple Phase 1 programs such as SEA-CD40 as well as data from TV in solid tumors other than cervical cancer. We also have plans to submit multiple INDs for novel product candidates during the course of the year. I look forward to sharing further details and developments as the year progresses.

Now I'll turn the call back over to Clay.

[Clay Siegall, President and Chief Executive Officer]

Thank you, Roger.

I'm proud of the remarkable progress we have made as a company over the past year, despite the challenges of COVID. We have set the stage for Seagen's next phase of innovation and execution, and the company has never been stronger and better positioned for growth. We have an expanding commercial portfolio, deep pipeline, broad geographic footprint, powerful partnerships, and a focused strategy. This will in turn increase our ability to reach more cancer patients globally who need lifesaving therapies. I would like to thank everyone listening to this call for your continued interest in Seagen and your ongoing support.

Operator, please open the line for Q&A.

[Operator]

Thank you. [Operator Instructions] And our first question today will come from Kennen MacKay with RBC Capital Markets. Please go ahead.

[Kennen MacKay, RBC Capital Markets]

Hi, thanks for taking the question and congrats on the progress on 2020, what a year? Maybe just on the guidance for TUKYSA and for PADCEV, just wondering if there's anything that you can comment around what is baked into that in terms of indication expansion or geographic expansion or whether that's all upside and that's just based on the current invitation? Thank you.

[Clay Siegall, President and Chief Executive Officer]

Sure Kennan. Thanks for the question. Can you hear me, Kevin?

[Kennen MacKay, RBC Capital Markets]

Yes. Sure can.

[Clay Siegall, President and Chief Executive Officer]

Okay, good. So to make sure. You ask questions about the TUKYSA and PADCEV, so first of all we're really excited that we have three approved drugs and are launched for both PADCEV and TUKYSA has been largely through – either largely or all through COVID. So we've had to come up with a new way to launch drug on PADCEV. It – we're now standard of care for advanced urothelial cancer patients who've received platinum and PD-1 and so we're very good shape with that. We've had great progress. Chip, would you like to give a little bit of color on the guidance and what it really reflects?

[Chip Romp, Executive Vice President, Commercial, U.S.]

Sure, Clay. So we're monitoring ongoing changes in the marketplace. We're seeing a move of PD-1 and PD-L1 utilization into the frontline, which is an essence of the expanded PADCEVs treatment of patient population. So that's just a key driver for us in 2021. With regard to TUKYSA we continue to see increase utilization in both patients with brain metastases and patients without, so we're really focused on 2021 for promoting the full breadth of a label that we use.

[Operator]

And our next question will come from Geoff Meacham with Bank of America. Please go ahead.

[Geoff Meacham, Bank of America]

Afternoon, guys. Thanks for the question. I just had a couple of quick ones. Roger, when you look at the PADCEV first-line opportunity from cohort K, what's the normal duration of response from chemo that you'd expect and are there ways to win let's say on an equivalent ORR, but perhaps better tolerability?

And then for Todd or Chip, this is also on guidance. Just wanted to ask how much of a continued headwind from COVID is reflected and is there a way to quantify it or at least tease out which products could be affected? Thank you.

[Clay Siegall, President and Chief Executive Officer]

Geoff thanks for both of the questions. Let's start with Roger talking a little bit about the frontline, PADCEV story where we have actually two frontline trials, but I think Geoff is focused on cohort K, but Roger you can discuss what you'd like to on that frontline trial basis.

[Roger Dansey, Chief Medical Officer]

Sure. Yes. Thanks, Clay and thanks for the question, Geoff. It's an interesting one. So as you know, the data we've generated with PADCEV and KEYTRUDA is remarkable. It is of course a single arm trial, with 45 subjects, but we have response rates that is substantially better than anything one could generate with standard of care. The inflammation around – so I think our expectation, our hope is that they will – they won't be equivocation on the ORR. Obviously the data has to play out.

With regard to durability, what's really important as you know is when you give a PD-1 inhibitor, one of the absolute hallmarks, the durability. So it's as high as the ORR is in the data generated date. The long-term outcomes such as durability of response and progression-free survival in overall are equally remarkable.

With standard chemotherapy, PFS is measured in a sort of seven month period. I don't have a specific number for DOR for you because it's not often reported, but it's hard. Again, if we can recapitulate even to a reasonable degree that better we've generated so far, I think we'll have a compelling story to tell.

[Clay Siegall, President and Chief Executive Officer]

And then on the guidance front with – Geoff, you're asking a little bit about headwinds potentially with COVID and certainly we – every company would be remissed to say everything is perfectly normal with COVID there. I mean, there was a big article in Fierce Biotech I think within the last two days about how oncology clinical trials are 60% down in enrollment. Ours are doing well. We're not 60% down, but I certainly understand the difficulties of running clinical trials during COVID. Also with guidance, patients just coming in to get therapy, whether it's first-line Hodgkin lymphoma or older patients coming in with, for example bladder cancer. So there's certainly some headwinds, but we've done great. I think we're really getting our exciting medicines out.

Chip would you like to, or they'll start with Chip and then Todd, if you have something you'd like to add, it'd be great. Chip, any thoughts on the guidance as per COVID headwinds?

[Chip Romp, Executive Vice President, Commercial, U.S.]

Yes. Well, so it's obviously difficult to predict what's going to take place with the pandemic. There's no doubt that it's been a headwind, but I would tell you the teams have adapted well with regard to our promotional efforts. We've altered a lot of the digital mix that we have from a marketing standpoint, we're putting an emphasis on that, and so we're pleased with the results that we're seeing so far.

[Todd Simpson, Chief Financial Officer]

Yes. And this is Todd. I'll maybe add a couple of thoughts. With respect to ADCETRIS, it's a little bit easier to correlate COVID effect with what's happening in the marketplace. Chip has previously talked about it and we've talked about for a few calls now that we're seeing about a 15% reduction in the diagnosis rate of frontline Hodgkin lymphoma. We can get to those data through review of things like electronic medical records, with drugs like TUKYSA and PADCEV; it's a little harder to pinpoint exact causality. But to Clay's point, I think we're all experiencing a little bit of pain with COVID. Now with that in mind, I think we're all hopeful that we're just about to get behind. This thing it's hard to speculate on, when that might happen but we're hopeful that as the pandemic resolves, things will come back to normal a little bit.

[Geoff Meacham, Bank of America]

Thanks guys. Thanks Clay. Congrats on all the progress.

[Clay Siegall, President and Chief Executive Officer]

Thanks, Geoff.

[Operator]

And our next question will come from Cory Kasimov with JP Morgan. Please go ahead.

[Cory Kasimov, JP Morgan]

Hey, good afternoon guys. Thanks for taking the question. I have one on PADCEV and with the product on the market for a little over a year now, curious if you can tell us more than the average number of cycles you're seeing per patient in the real world, kind of how that's evolving as well as sort of the latest in terms of an annualized cost of treatment per patient. And Roger, you mentioned that the rash that you've seen and you've alerted doctors to, is that impacting things in any material way on the commercial front? Thank you.

[Roger Dansey, Chief Medical Officer]

Cory thanks for the question. As far as the average cycles that were out there, we are – I don't think we've really discussed that. We discussed like how long in general we treat people, but it's really different for a lot of patients and the annualized costs. So – and we give them some information on that.

Chip, would you like to talk a little bit about roughly the cost per patients with PADCEV? Clearly this is not in the frontline; this is in the relapse setting, which is our current label. So Chip you have any comments on that?

[Chip Romp, Executive Vice President, Commercial, U.S.]

Yes. I do, Clay. So if I were to just kind of ballpark net price associated with this reflecting gross to net and discounts that are given associated with, it'd be about 90K – $90,000 per patient.

[Clay Siegall, President and Chief Executive Officer]

Yes. So, thank you. So that's about right. And so when people ask me, I usually am somewhere in the 90,000 to 95,000; so it's about really where we are. It depends on the patient and their size, et cetera. On the question you have on the rash, we – in our initial USPI, we described skin reactions, including some that are severe. And Nectin-4 is a great target. Nectin-4 binds to tumors like crazy, especially urothelial tumors and some other ones that we're screening. And you'll hear more about that about our basket study, but it also buys like almost every antibody. It has some normal tissue cross-reactivity. And so we've known about the skin and there's some patients that get rash and we have a section in the warning super cautious, so that doctors are well aware of what this is.

And so we call it out and most of the time it's nothing to write home too much about. Sometimes it gets more severe. We think that has a very favorable risk benefit and we've shown that through overall survival in the 301 study, which we'll be presenting the data tomorrow. So that's something really to look forward to. And when you see an OS benefits, and rapid control of the disease, you have to weigh that against any of the side effects of any drug. And we think that doctors are well aware of this, are used to using this. And having the side effects that almost every cancer drug has is, the goal is really to make sure that doctors are aware as to try to put it in the best light so that they can watch it. And if there's any – anything happening with the patient, they could – they could manage it correctly or hold drug or do whatever they need to. And that's the case for all of our drugs, because looking at patient safety is number one issue.

I don't know if that answered your question. Roger, do you want to put in any thought on this about…

[Roger Dansey, Chief Medical Officer]

No, sure. And I think, Cory's question around, does this actually impact durational therapy? I think Clay has made the right points, which is rash does occur, it's generally mild and transient. And it does not meaningfully interfere with therapy. For these very rare events obviously the drug needs to be discontinued. So any bad reaction would require just discontinuation, but the frequency of those events is low. So yes, I don't think we believe that this changes in any way, the way PADCEV is being used or the length of therapy that it's currently used at.

[Cory Kasimov, JP Morgan]

Okay. Thank you. Appreciate it.

[Operator]

And our next question will come from Salveen Richter with Goldman Sachs. Please go ahead.

[Salveen Richter, Goldman Sachs]

Good afternoon. Thanks for taking my question. Given the guidance for PADCEV only includes on-label use. Could you help us understand what the incremental market share will be when the additional indication comes on board or indications come on board this year?

[Clay Siegall, President and Chief Executive Officer]

Salveen, thank you for the question. And we have two submissions; the first one is what we call cohort 2, which is the more frail and weak patients. These were the CIS-ineligible patients. And then the second cohort of patients or the second study that we report is called our 301 study, which is our global study.

Roger can talk about both of those trials and maybe, what they mean we put out the top line data, tomorrow we'll be at ASCO GU, which just so happens, it's tomorrow. We wish we could tell you more today, but we need to save it for the presentations at the conference by the investigators. They deserve the right to present this. So we're sorry, it ends up to be tomorrow, but we'll announce the full data tomorrow and all that. So look for that, and we'll present this.

So maybe Roger could give you just a little color about these two trials and then, Chip, you can maybe talk a little bit about what you think would add to market here and managed, balancing what docs could be using off-label for what any new label could be doing?

Roger, you want to start in kind of outline this?

[Roger Dansey, Chief Medical Officer]

Sure. So the randomized trial EV-301 is essentially a recapitulation of cohort 1. So it's the same population patients who've seen a platinum therapy followed by a PD-1 or a PD-1 inhibitor. And the important outcome is that overall survival is improved against standard chemotherapy. And that standard chemotherapy is obviously suboptimal in terms of its outcomes. So I think we're really excited by that data. It is complete affirmation of the value that PADCEV can bring to this population. And obviously physicians will react differently in terms of level of evidence. Those who believe that an overall survival signal is required before using a drug, maybe compelled by this, although we think we already have more than enough efficacy data to support PADCEV's use.

With regard to cohort 2, this is a – it is a different population, that isn't older population, a more frail population. There is a proportion of patients, obviously, who, at the time of their initial therapy for metastatic disease, our deems cisplatin ineligible. It's around about half the population or general cisplatin eligible. And then the decision is made to use a PD-1 or a PD-1 inhibitor rather than an alternative agents like carboplatin or some of the other chemotherapies.

So there is a population that clearly gets treated like that. And effectively that PD-1 and PD-L1 is a first line treatment, and then the day that you'll see tomorrow and hopefully or find compelling does demonstrate that PADCEV in that situation produces excellent response rates and very durable outcomes including overall response, I mean, duration of response outcomes. So the exact size of that population, I think may be quite difficult to define; and Chip may comment on that suffice to say that checkpoint inhibitors are used widely in the cancer for good reason, because they make a difference. But we think that we add meaningfully to the sort of armamentarium for physicians as they manage metastatic urothelial cancer.

Chip, do you have any comments?

[Chip Romp, Executive Vice President, Commercial, U.S.]

Yes. What I would add to that Roger, thanks is, I would characterize this as a smaller segment of the population, but nevertheless a meaningful number of patients. And I think it's an important unmet need. PADCEV could offer once approved an important option for these patients, and I think that's what we're looking forward to.

[Salveen Richter, Goldman Sachs]

Thank you.

[Operator]

And our next question will come from Matthew Harrison with Morgan Stanley. Please go ahead.

[Matthew Harrison, Morgan Stanley]

Great. Good afternoon. Thanks for taking the question. Chip, I was wondering if you could just comment at all on what we may expect to see this year from the arbitration or the ongoing patent speeds that you have just in terms of whether you expect us to hear any resolution of that this year, potentially. Thanks.

[Chip Romp, Executive Vice President, Commercial, U.S.]

So, thanks for the question. So there's a lot of work ongoing with our legal dispute with the DS. I will tell you that – I will remind you that's a better way to say it, that we are not a litigious company, more – almost two and a half decades, and this is the first time we've had something like this. And so this is not our goal. Our goal is to really make a difference in the life of cancer patients, but we're compelled to defend our IP and our contracts. And so, there are two different things going on. One is an arbitration about a contract and one is a patent infringement suits. So both of those are in play, both of those are very active and there's a lot of legal activity on it. I'm not an attorney, so I can't describe it all to you, but – and it's confidential, but it is not sitting still by any stretch.

And so things are moving along well on that. It is – I really hope that there is some resolution on this year, but I can't promise you that. I'm not – I really don't know how fast arbitrators work and courts work. But I assume we certainly would love to see this effort being completed at some point. We feel we have a fantastic case. I mean to us it's a straightforward case. And it's something that we think that we deserve value and – and so we'll see what happens, but thank you for the question so – and please stay tuned. As soon as we have something to say, you bet, you'll be announcing it.

[Operator]

And our next question will come from Michael Schmidt with Guggenheim. Please go ahead.

[Michael Schmidt, Guggenheim]

Hi, guys. Thanks for taking my questions. I think I heard you mentioned CD40 at one of your earliest stage programs with updates here. And I think we've already seen some interesting early data at your R&D Day last year. But just curious if you could help us with expectations in terms of the data disclosures this year and how that might inform?

[Clay Siegall, President and Chief Executive Officer]

Sure. It was hard hear you. So I'll repeat the question for anyone who didn't hear. He asked about what we call SEA-CD40, which is a drug that sometimes I just call S40, but it is a – it's non-antibody drug conjugate. It is an effective function enhanced antibody through our SEA technology, which basically through manufacturing, very elegantly and simply, it competitively inhibits the terminal fucose from being added to an antibody. And it makes the antibody to have some extraordinary properties, which can be really helpful if you're looking at depleting tumor populations. And so it's not an ADC, but it's an empowered antibody by any other way of looking at it. And I've talked about it and say that I have interest in this. And so, usually, I don't – if you know me for a long time, I usually don't bring up drugs that I don't really have interest in.

And certainly we've developed a number of drugs that haven't made it past early trials. And I think S40 is a very interesting drug. We have committed to presenting data on that this year. So that's where we are on it. I – really the data will be in pancreatic cancer where we've been focused on. I am excited to complete the work. One of the things with pancreatic cancer, and if you look historically at panc, it's been a hard disease to treat. A lot of patients don't know they have the disease until they're pretty far along. It's different than some other diseases, which have obvious symptoms that you could see until it's too late. So unfortunately pancreatic cancer is a poorly treated disease that really needs new medicines.

And so that's one of the exciting things I have because we have such a big interest in making a difference in patients' lives and have had for a couple of decades now that pancreatic cancer has always been a tough disease to treat. So we're excited to see if we can make a difference in these patients' lives. And the early data that was very interesting and we – I mentioned it at one or two calls that I was interested in, but if you look historically, there's a lot of times in pancreatic cancer where you see some early data and hence – and then folks do larger studies and it doesn't pan out. And so that's something that if you don't learn the lessons of history, you're doomed to repeat them again. So we certainly have learned that. We've watched it.

And so we took some very exciting – interesting, exciting early data, and we've expanded it pretty dramatically to try to get a really good handle on what responses are, what's the duration, maybe even our early way of looking at this impact survival. So to see as best as we can what the data means. And then when we report the data, we also are – as we look at the data and then report the data, the question really is what happens next. And I'm hopeful that when the data come out, the data is robust and it's exciting and we decide to go into a pivotal trial. And I don't know yet, we're not announcing that, we're not guiding. But your question was what should we look for? Roger, do you have any other thing you want to mention about what they should look for?

[Roger Dansey, Chief Medical Officer]

I think that just too sort of repeat the scientific – the scientific hypothesis we're testing is a strong one. There's good preclinical data. The combination of a CD40 agonist, which we have had in the clinic, we already have evidence of single agent activity in some other diseases, but in this construct, we are combining it together with the frontline chemotherapy, which is a Abraxane sort of gemcitabine-based chemotherapy together with a PD1 inhibitor. And those three interventions, those are all sort of kill the cancer cell with the chemotherapy stimulate antigen presentation with the CD40 and other things, by the way, from a mechanistic perspective, and then make sure that the brakes are taken off any of the T-cells. So it's a very strong scientific hypothesis. As Clay said, we've enrolled a good number of patients. We will wait for the data to readout. And we'll make our determination at that point as to what our next steps could be.

[Michael Schmidt, Guggenheim]

Great. Thank you.

[Operator]

And our next question will come from Gena Wang with Barclays. Please go ahead.

[Unidentified Analyst]

Hi. This is [indiscernible] on behalf of Gena. Thanks for taking all our questions. Just a two very quick one on the guidance, one is on PADCEV. In your prepared remarks, you mentioned that considering PADCEV's current high – their high market share. Could you comment on what range of market share are we talking about like 40% to 60% to 80% or even higher? And another one is on TUKYSA guidance. What type of all OUS revenue are you assuming in this guidance? Or are we talking about predominantly U.S. sales for 2021? Thanks.

[Clay Siegall, President and Chief Executive Officer]

Yes. So thank you for the question like on the specifics – on the specifics of market share percentage, that's not something we usually talk about because once you start going into percentage then every quarter everyone is asking, what's your percentage and all that. And just it's kind of – we report our numbers and that's really what's important. And so we feel its standard of care. And Chip, if he wants to, he can make a comment on the market share and what doctors think of this and with PADCEV. On TUKYSA with the guidance, I think I'd like Todd to make a comment on. You asked the question about outside U.S. revenue and what's included in guidance. So why don't we start there with Todd. Todd, why don't you start on the guidance for TUKYSA?

[Todd Simpson, Chief Financial Officer]

Sure, Gena. Thanks for the question. So the vast majority of our TUKYSA guidance is U.S. sales. And we do have approvals in a few other countries under Project Orbis, and of course we're looking forward to approvals broadly in Europe and starting to do that next year, but the vast majority of our guidance for TUKYSA is U.S. base.

[Clay Siegall, President and Chief Executive Officer]

Okay. And then on going back to PADCEV and the market share and stuff like that. Chip, do you want to give a little color on that?

[Chip Romp, Executive Vice President, Commercial, U.S.]

Yes, thanks, Clay. So, as a standard of care, I would say that we're well positioned in 2021 to intersect with a very important point in these changing market dynamics. I think you're going to continue to see the PD1 and PD-L1 utilization increase in frontline. And I think that's going to put PADCEV in a favorable position.

[Unidentified Analyst]

Got it. Thanks so much.

[Operator]

And our next question will come from Andy Hsieh with William Blair. Go ahead.

[Andy Hsieh, William Blair]

Okay. Thanks for squeezing me in. Congratulations to everyone at Seagen for a banner year in 2000. So I had a question in kind of early stage bladder cancer for PADCEV. It seems like you guys basically encroach the whole bladder cancer treatment paradigm everywhere overnight. So typically in the non-muscle invasive bladder cancer, there have been some challenges – challenges associated with BCG supply. So I'm just wondering for the intravesical use are you looking at – beyond basically non-responsive, are you looking at patients who are not suitable for BCG as well just kind of broaden the opportunity there?

[Clay Siegall, President and Chief Executive Officer]

Yes. Thank you for the question. We were really excited about PADCEV in all aspects of bladder cancer like you say, whether it's metastatic, muscle invasive where we have a lot going on, as Roger talked about, and our next area that we're going after is non-muscle invasive, but we've done a lot of work on there. We haven't started the trials yet. We're well aware of the BCG challenges. Roger, do you want to give a little color on intravesicular use of what we're thinking?

[Roger Dansey, Chief Medical Officer]

Yes. Andy, it's a great question. Obviously, we're just beginning and we haven't disclosed any of the clinical trial plans, but we are – as we in prepared remarks, we are in advanced planning. We think the profile for PADCEV could be very favorable based on minimal systemic exposure and activity directly into the bladder. The place to start, as you say, for all programs is in BCG non-responsive, but if we find PADCEV is active in that population, we would obviously move or make plans to move into earlier lines of therapy. Again, it's a balance of how much benefit can we bring versus how much risk do we bring to bear on the circumstance. And until we have generated the data we won't know, but I can tell you aspirationally we would like to have PADCEV positioned if we can in non-muscle invasive bladder cancer wherever it's appropriate to address the unmet need.

[Andy Hsieh, William Blair]

Okay. Thank you very much.

[Operator]

And our next question will come from Andrew Berens with SVB Leerink. Please go ahead.

[Andrew Berens, SVB Leerink]

Hi, thanks. I was wondering if there's a potential for increased rates or increased severity of skin rash when you give PADCEV with checkpoints versus PADCEV alone?

[Clay Siegall, President and Chief Executive Officer]

Thank you very much for the question on that. We're in trials now as you know. Roger, can you comment as to – we have some data that's actually been presented on this, but we have ongoing trials. And so perhaps talking about anything we've seen in the on – and the data that – that is going to be a fair game, Roger.

[Roger Dansey, Chief Medical Officer]

Sure. So, Andy, as you know, we believe we're confident in, and we believe that the combination of PADCEV plus KEYTRUDA has tremendous potential in bladder cancer, not just in metastatic, but in the muscle invasive circumstance as well. And there's lots of scientific reasons to believe that a vedotin based ADC maybe particularly powerful when it's combined with a PD1 inhibitor. From a safety perspective, obviously all clinical trials that we run, we monitor safety carefully. There are no changes to any of our plans with regards to what we are doing in our clinical trials. The data we presented today twitches around 45 subjects where we did report overall skin rashes and grade 3 [indiscernible]…

[Clay Siegall, President and Chief Executive Officer]

Roger, I just lost hearing you. Can you guys hear me?

[Chip Romp, Executive Vice President, Commercial, U.S.]

Yes, I think it's related to Roger.

[Clay Siegall, President and Chief Executive Officer]

Yes. Okay. Well, we lost Roger. So, Andy, are you still on?

[Andrew Berens, SVB Leerink]

Yes, I'm still here. Yes.

[Clay Siegall, President and Chief Executive Officer]

Okay. Did you get enough of an answer from Roger?

[Andrew Berens, SVB Leerink]

I think he was just about to talk about the data in the 45 patients. So we got cut off unfortunately.

[Clay Siegall, President and Chief Executive Officer]

Yes, so Roger got cut off. Our data in the patients did not show anything that was obvious to us that there'd be a problem at all. In fact, it shows the opposite. It shows that the patients did incredibly well on the two drugs together and we got breakthrough designation and we're – we've been enrolling a lot of patients in both the accelerated trial and the global trial. And so, where we sit now, we're pretty darn excited on this. And I know I don't know any reason that we would be inhibited from going forward if that's what you're looking for.

[Andrew Berens, SVB Leerink]

No, I was more interested in just as if the rash is worse or more frequent and it could be more of a commercial issue.

[Clay Siegall, President and Chief Executive Officer]

Yes. We have not seen that.

[Andrew Berens, SVB Leerink]

Okay.

[Clay Siegall, President and Chief Executive Officer]

In the trial that we've presented on, we have not seen that.

[Andrew Berens, SVB Leerink]

Okay.

[Clay Siegall, President and Chief Executive Officer]

We don't see any potential limitation and commercial with a combination at this point, obviously that's why you do big studies and you study these, so we'll have to see in the future, but for what we've seen to date we see no issue with going forward commercial with that…

[Andrew Berens, SVB Leerink]

Okay, thank you.

[Clay Siegall, President and Chief Executive Officer]

We've taken up PADCEV very well. I mean, it’s really exciting to see a drug become standard of care in metastatic setting pretty quickly.

[Operator]

And our next question will come from…

[Peggy Pinkston, Vice President of Investor Relations]

Operator, we have time for one more question.

[Operator]

Absolutely and that question will come from Jay Olson with Oppenheimer. Please go ahead.

[Jay Olson, Oppenheimer]

Hi, congrats on all the progress and thank you for the update. I appreciate your three pillared strategy and wanted to ask you about your plans to maximize the global potential of your portfolio, which you have traditionally done through partnerships outside the U.S. And now, since you're building you TUKYSA in Europe, do you envision eventually building a global infrastructure and taking your early stage pipeline all the way from development through global registration and commercialization independently?

[Clay Siegall, President and Chief Executive Officer]

So, Jay, first of all, thank you for the question. Thank you for noticing that we have expanded on the backs of TUKYSA – on the back of TUKYSA to include greater Europe, which is quite a lot of countries. So and our team there is just ready to go. We're really excited to start getting this out to patients in need and working with docs and all that, so hopefully that soon. But as far as the future past there, what I would say is it depends. And I don't mean to be ignoring your question. It is not that easy for U.S. biotechs or for that matter U.S. pharma sometimes to do a lot of work in let's say a certain parts of Asia, especially the two biggest markets, Japan and China.

And so it is something that we're looking at closely as to what we would do with additional drugs and whether we would consider putting in Asia, for instance, at some of the big markets. And so that's something we're talking about. I don't want to tell you, yes, we're going to do it or no. We do have great partners. We know all the best partners and distributors in different territories and whether we want a partnership or distribution is something you have to look at everywhere. But I'm really glad that we're going broader in a commercial way. And I hope as part of our pillars that we continue to broaden out our global reach.

[Jay Olson, Oppenheimer]

Great. That's super helpful. Thank you.

[Operator]

And this concludes the question-and-answer session. I'd like to turn the conference back over to management for any closing remarks.

[Peggy Pinkston, Vice President of Investor Relations]

Okay. Thank you operator and thanks everybody for joining us this afternoon. We look forward to staying in touch and hope you have a good evening.

[Operator]

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines at any time.